Double Trouble – Apple’s Recent Legal Setbacks Highlight Key Lessons in Global IP Strategy

Apple Inc. continues to sit at the forefront of global innovation, but even the most sophisticated technology companies are not immune to complex legal challenges. In recent weeks, Apple has faced two significant intellectual property (IP) setbacks, one in the United States and one in the United Kingdom, each with far-reaching implications for companies navigating patent litigation, standards licensing, and global IP enforcement.

This blog examines two recent decisions that have put Apple’s IP practices under scrutiny: one involving the use of Applicant Admitted Prior Art (AAPA) in a U.S. case before the Federal Circuit, and another concerning royalty obligations for standard-essential patents (SEPs) in the UK.

Federal Circuit Reverses PTAB Decision: AAPA Misapplied

In April 2025, the U.S. Court of Appeals for the Federal Circuit overturned a favorable ruling for Apple by the Patent Trial and Appeal Board (PTAB). The case centered on Apple’s challenge to a patent using a combination of a printed publication and Applicant Admitted Prior Art (AAPA), statements made in the challenged patent’s own specification acknowledging the existence of certain prior art.

The PTAB had sided with Apple, holding that the combination was valid grounds to invalidate the claims. However, the Federal Circuit disagreed, clarifying that AAPA alone does not constitute “prior art consisting of patents or printed publications” as required under the America Invents Act (AIA) for inter partes review (IPR) proceedings. The court ruled that while AAPA may inform a skilled artisan’s understanding, it cannot be the primary basis for an obviousness challenge.

Implications:

  • Limits of IPR Strategy: Companies seeking to invalidate patents at the PTAB must ensure their arguments rely primarily on statutory prior art. Internal admissions, even when found in the patent under review, are not enough.
  • Importance of Procedural Precision: This case reinforces how procedural interpretation can outweigh substantive arguments. Understanding statutory language is critical to litigation success.
  • Drafting Risk Awareness: While not directly at issue in this case, the broader takeaway for patent applicants is to be cautious when characterizing prior art in their applications, as such language can be used in litigation, though with limits.
  • Increased Scrutiny of PTAB Practices: The ruling may prompt changes in how PTAB applies AAPA going forward, potentially raising the bar for IPR petitioners more broadly.

UK Court of Appeal Orders Apple to Pay $502 Million in FRAND Dispute
Just days later, Apple received another legal setback, this time from the UK Court of Appeal. On May 1, 2025, the court affirmed a judgment requiring Apple to pay $502 million to Optis Cellular Technology LLC for a global license to its 4G standard-essential patents. The case, which began when Optis sued Apple in 2019, centered on the appropriate amount Apple must pay under fair, reasonable, and non-discriminatory (FRAND) licensing obligations, which are required under global standards-setting agreements.

The decision dramatically increased the damages from the UK High Court’s 2023 estimate of just over $56 million which was made by the judge at the High Court of England and Wales without reliance on experts from either company. The UK Court of Appeals found that a lump-sum license more accurately reflected the global nature of Apple’s 4G usage and the market value of Optis’s portfolio when awarding $502 million based on a $0.15 per unit royalty. Apple had previously indicated that it would not accept a license on terms set by the UK court and may appeal this decision.

Implications for large IP holders and the broader IP landscape:

  • FRAND Licensing as a Global Risk: The case signals a shift in how courts outside the U.S. are willing to impose significant global licensing terms, even where the jurisdictional scope is limited.
  • Litigation Forum Strategy: SEP holders may increasingly look to the UK and other jurisdictions as favorable venues for global FRAND determinations.
  • Financial Exposure in SEP Disputes: The magnitude of the damages awarded suggests that SEP enforcement remains a serious financial risk for tech companies, especially those reliant on standard essential patents.

Strategic Takeaways for Technology Companies
Taken together, these rulings offer several lessons for companies navigating the increasingly complex world of IP litigation:

  • Global IP Planning is Essential: Legal decisions in one country can have global implications. Multinationals must anticipate and coordinate litigation strategies across multiple jurisdictions.
  • Proactive Legal Audits: Regular reviews of patent drafting practices and litigation exposure are crucial. Ensuring that internal admissions in patents does not open doors for unintended invalidity risks is now more important than ever.
  • Valuation and Licensing Readiness: As courts impose large-scale licensing obligations, companies must be prepared to defend or justify the value of their own and others’ patent portfolios, especially under FRAND regimes.

Conclusion
Apple’s recent legal setbacks illustrate the challenges even the most sophisticated companies face in managing global intellectual property. The Federal Circuit’s reversal and the UK’s expanded damages ruling in the Optis case serve as timely reminders that patent strategy must be tightly integrated with legal, technical, and business planning.

For consulting firms advising clients on IP strategy and valuation, these cases reinforce the value of forward-looking risk assessments, cross-border legal coordination, and ongoing patent portfolio management. As courts refine the rules around prior art and FRAND licensing, staying ahead of evolving jurisprudence will be key to maintaining competitive advantage and avoiding costly surprises.

Arthrex v. Smith & Nephew: SCOTUS Preserves Inter Partes Review

We last wrote about the Arthrex case back in November of 2019 and this blog is a continuation now that the case has finally reached a decision by the Supreme Court. In our previous blog, we described how the United States Court of Appeals for the Federal Circuit ruled that the appointment of the Patent Trial and Appeal Board’s (“PTAB”) Administrative Patent Judges (“APJs”) violated the Appointments Clause of the U.S. Constitution. This decision was based on the lack of direction and supervision of APJs by the presidentially-appointed Secretary of Commerce or Director of the USPTO as well as the lack of independent statutory authority to review the final written decisions by the APJs during inter partes revew. These factors resulted in the United States Court of Appeals for the Federal Circuit to decide that APJs are acting as principal officers, in violation of Appointments Clause, and to remedy the constitutional violation the tenure protections of APJs were invalidated.

On June 21, 2021, the U.S. Supreme Court delivered its written opinion in United States v. Arthrex, Inc. in which it vacated the judgement of the United States Court of Appeals for the Federal Circuit and remanded the case to the Acting Director of the USPTO. In its opinion, the Court addressed the responsibilities of the APJs and, as was the case in the previous ruling, focused on the requirement that APJs, as inferior officers, are required to be directed and supervised at some level by others who were appointed by Presidential nomination with the advice and consent of the Senate. In the case of APJs, the majority opinion concluded that lack of review by a superior officer meant that the APJs wielded unreviewable authority during inter partes review which elevates them to a higher position than an inferior officer, in violation of the Appointments Clause.

The Court then addressed the appropriate remedy for the violation of the Appointments Clause and crafted a tailored approach to overcome the Constitutional violation. The remedy described in Part III of the Court’s opinion created a new framework for review by the Director of the USPTO of PTAB decisions and the ability of the Director to issue decisions on behalf of the PTAB. In crafting this remedy, the Court overcame the lack of review by a Presidential nominee and therefore preserved the status of APJs as inferior officers. The Court was careful to note that this decision “concerns only the Director’s ability to supervise APJs in adjudicating petitions for inter partes review” and does not address over types of adjudications conducted by the PTAB.

It is unclear at this stage how this Director-level review will be made available for parties in inter partes review proceedings and by what standard the Director will review petitions for rehearing by disappointed parties. In 2020 there were more than 1,400 inter partes review petitions and over 400 Final Written Decisions by the PTAB. Given these number, it is unlikely that the Director of the USPTO will review all decisions by APJs, but this framework enabled the Court to preserve the inter partes review process and we are forced to wait and see how this new power by a political appointee will impact the post-grant proceedings of the PTAB.

Arthrex v. Smith & Nephew: Inter Partes Review and Unconstitutional Appointment of APJs

On Halloween, the United States Court of Appeals for the Federal Circuit delivered its opinion in Arthrex, Inc., v. Smith & Nephew, Inc. that the appointment of the Patent Trial and Appeal Board’s Administrative Patent Judges (“APJs”) violates the Appointments Clause of the U.S. Constitution. The background of this case involved Arthrex receiving a final written decision in the inter partes review of its patent finding the claims unpatentable as anticipated. Anthrex subsequently appealed the written decision of the PTAB arguing that the APJs presiding over the inter partes review were not constitutionally appointed.

A brief background on the appointment and power of the APJs is required to understand the potential impact of this decision. APJs are appointed by the Secretary of Commerce in consultation with the Director of the USPTO. This leads to the question of whether the APJs are defined as inferior officers or principal officers. The Court described the functions of APJs in determining how to define these officers and highlighted the significant discretion APJs exercise when carrying out their functions in the inter partes review process. It was noted that their decisions on patentability are final and subject only to rehearing by the Board or appeal to the CAFC. The Court then described the defining characteristics of inferior officers as compared with principal officers as being: (1) whether the officer has a superior, (2) whether the superior was appointed by Presidential nomination, and (3) the level of supervision and direction over the officer by the superior.

The Court then explained that the two presidentially-appointed officers at the USPTO, the Secretary of Commerce and the Director of the USPTO, provide direction to the USPTO. While these officers provide direction, the Court held that neither officer individually nor combined exercised sufficient direction and supervision over APJs to render them inferior officers. The Court’s opinion was based on the lack of independent statutory authority to review the final written decision by the APJs before that decision is issued on behalf of the United States. Another factor considered by the Court was the removal power over an officer, which the Supreme Court described as “a powerful tool for control.” APJs, the court noted, may be removed “only for such cause as will promote the efficient of the service,” meaning that the APJ may be removed when his or her misconduct is likely to have an adverse impact on the agency’s performance. With this in mind, the Court held that APJs are principal officers and thus the current structure of the Board violates the Appointments Clause because the APJs are appointed by the President and confirmed by the Senate.

In an effort to resolve the Constitutional conflict, the Court suggested removal of the employment protections that currently exist and providing the presidentially-appointed officers at the USPTO broad removal powers over APJs. It is unclear what the lasting impact of this decision will be, but recently, the House Judiciary Committee’s Subcommittee on Courts, Intellectual Property, and the Internet conducted a hearing that included a discussion of the Arthrex decision. A variety of solutions were presented and discussed to resolve the issue created by the Arthrex decision and time will tell if a legislative fix will soon emerge.

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